Professional Documents
Culture Documents
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them to submit all additional material pertinent to the motion.
[#31]. I dissolved the stay on November 20, 2009. The parties
then filed supplemental briefing and affidavit testimony
regarding the release and addressing Bains new allegation that
the release was fraudulently obtained. [#48, #54, #59, #60,
#61].
The Jackson parties replied with their own new
(alternative) argument that the binding arbitration clause in
the Release requires dismissal or a stay in this case. Under New
York law, the contractual right to arbitrate may be waived, when
the requesting party engaged in litigation to such an extent as
to manifest[] a preference clearly inconsistent with [its] later
claim that the parties were obligated to settle their differences
by arbitration and thereby elected to litigate rather than
arbitrate. See, e.g., Les Constructions Beauce-Atlas, Inc. v
Tocci Bldg. Corp. of New York, Inc., 294 A.D.2d 409, 410 (N.Y.
App. Div. 2002) (internal quotations omitted). To avoid waiver,
a party must raise its desire to arbitrate promptly and must
decline to avail itself of pre-trial discovery and other attempts
to litigate on the merits. Id.
The Jackson parties first filing did not raise the
arbitration issue. Rather, they elected to address the merits of
Bains claim, and did not invoke their right to arbitration -
presumably realizing that the case would not be resolved quickly
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her hand-written edits to the Release, itemizing the payments she
intended to release, [#27-2 at 20], and she explains that
Jacksons attorney, Frank Salzano, represented, in his 12/03/07
email, that the Release was necessary to clean all past debts
and liabilities of Mr. Jackson, [#60-2].
Under New York law, the rule is that a valid release
which is clear and unambiguous on its face and which is knowingly
and voluntarily entered into will be enforced as a private
agreement between the parties, even if one of the parties claims
he intended a narrower release. See, e.g., Chaudhry v. Garvale,
262 A.D.2d 518, 519 (N.Y.A.D. 2 Dept, 1999). Because I find no
ambiguity in the language of Bains Release, I may apply it
without considering Bains testimony about her
intent. Consolidated Edison, Inc. v. Northeast Utilities, 332
F.Supp.2d 639, 647 (S.D.N.Y. 2004). The Release unambiguously
covers all monies, known or unknown, owed under any and all
agreements whether written or verbal. (emphasis added) That
release language covers Bains claims about the Thriller deal,
the Grammy ceremony, the AEG project, and the SONY/ATV
refinancing, no matter what stage they were in when the release
was signed.
But Bain goes on to argue that, even if the Release
does cover her claims, it is void because she was fraudulently
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induced to sign it, or, alternatively, because she was mistaken
as to is effect.
To establish fraud-in-the-inducement under New York
law, Bain must prove that the Jackson parties (1) made a material
representation or omission which was false and known to be false
(2) for the purpose of inducing her to rely on it, and (3) that
Bain reasonably relied upon it in entering the agreement (4) to
her detriment. See, e.g., Lama Holding Co. v. Smith Barney,
Inc., 88 N.Y.2d 413, 421 (N.Y. 1996). Where the claim is that
the defendant fraudulently concealed a material fact to procure
the agreement, the plaintiff must show that the defendant had a
duty to disclose the concealed information. See, Sitar v. Sitar,
61 A.D.3d 739, 741 (N.Y. App. Div. 2009). Absent a fiduciary
relationship between the parties, a duty to disclose arises only
where one party possesses superior knowledge of essential facts
that makes a transaction inherently unfair if those facts are
not disclosed, those facts are not readily available to the other
party, and the first party knows that the second party is acting
on the basis of mistaken knowledge. UniCredito Italiano SPA v.
JPMorgan Chase Bank, 288 F.Supp.2d 485, 497 (S.D.N.Y. 2003).
Bains own complaint demonstrates why the Jackson
parties had no duty of disclosure. It paints a picture of Bain
as a savvy business woman who founded her own public relations
firm, has represented many high profile public figures in the
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Productions of her expectation that she would be paid. In fact,
Bain provides virtually no explanation of what or who MJJ
Productions is; or how it is related to this suit; or whether she
even interacted with it during her negotiations. Such a claim
without any support or reasonable likelihood of finding support
through discovery cannot withstand summary judgment.
An appropriate order accompanies this memorandum.
JAMES ROBERTSON
United States District Judge